4 tips you need
to know for better
Cash Flow

Projecting the peaks and valleys

You can't predict everything that might happen in your business, but smart cash flow management can help insure you have the funds you need to meet your basic expenses.

Cash vs. Cash Flow

Cash – Money in the bank. It is not inventory, accounts receivable or property.

Cash Inflow – Money coming into the business from accounts receivable (sales), investment income (by partners for example), loan advances, tax refunds, rebates.

Cash Outflow – Money flowing out of the business through accounts payable (suppliers), monthly expenses (utilities, rent, insurance, etc.), payroll, taxes, loan payments, fees and investments.

Cash Flow – The flow of income and expenses through the business. Positive cash flow means the cash inflow exceeds the cash outflow (cash leftover after all expenses are paid). Negative cash flow indicates expenses are exceeding available cash to pay for them.

Tip#1 Create a cash flow projection
A cash flow projection is your timeline of projected income and expenses. You estimate the inflow and outflow of cash and whether there is enough cash projected to cover your anticipated expenses. Be sure to include seasonal peaks and valleys, such as higher utility bills.

Prepare your cash flow projection on a monthly basis for a period of 6-12 months, 2, 3 or even 5-year periods. Most small business accounting software programs have the ability to create cash flow projections, or you can use a simple spreadsheet.

Tip#2 Be realistic
Be honest with yourself in what you're projecting. Don't spend the money before you make it. With planning, a line of credit can help even out peaks and valleys without stressing the business.

Tip#3 Communicate
Communicate regularly with your business partner, your banker and your spouse (if involved in your business). If a customer hints the payment may be delayed unexpectedly, communicate how that might affect your ability to cover upcoming expenses. Review your cash flow projection to see if you will have enough cash on hand, given this new information.

Tip#4 Plan ahead
A cash flow budget is an excellent tool to help you plan ahead. It's important keep the future in mind. Don't just focus on today.

Cash Flow Management Tools

Your PCB Loan Officer

Ask your loan officer to review your cash flow projections. Call these direct lines to speak to Lynn Kinder (547-4813) or Gene Wollenberg (547-4817). It's a free service to all PCB business customers. Customer service reps can assist with a number of concerns as well. We're here to help — call 547-4850!

Line of Credit

A line of credit is a revolving loan that allows you to advance funds as you need them. Talk to your PCB loan officer about how a line of credit might help you.

Loans: Short- or Long-Term

Short-term loans (60 or 90 days) for example can help contractors purchase materials when a bid has been awarded on a contract job. Replacing aging equipment may qualify for a long-term loan. Call your PCB loan officer at 547-2436 to learn about the best use for short-term or long-term loans.

Online Banking

Check your balance in moments. Reconcile your checkbook regularly. Sign Up for Online Banking Today! Call 547-4850 and ask for Teresa, Janie or Sheila.

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